The Home Buyers’ Plan was created by the government to help Canadians get over the big hurdle of saving up a down payment for their home.

It allows qualified individuals to borrow up to $35,000 from their registered retirement savings plans (RRSPs) to use toward the down payment. The money needs to be repaid within 15 years to avoid having it count as taxable income.

While there are certainly advantages to using this program for your down payment, it may not be the right move for everyone. Learn more about the details so you can make an informed decision.

Who Should Borrow

The Home Buyers’ Plan is especially helpful for first-time homebuyers who are having a hard time saving up tens of thousands of dollars for a down payment. Paying rent can feel like you’re just throwing money away because you’re not building up any equity. But high rent payments make it hard to save up the money you need. Borrowing from your RRSP makes sense.

Even those who have a sizable amount of money saved up already may want to consider taking advantage of the program. You could use the money you borrow to give your savings a boost to reach a 20 percent down payment. This will allow you to avoid mortgage insurance, which adds to the cost of your monthly mortgage payment.

Qualifying for the Home Buyers’ Plan

To qualify for the Home Buyers’ Plan, you have to be a resident of Canada and a “first-time homebuyer”, but that’s a bit misleading. Actually, you can count as a first-time homebuyer even if you’ve owned your home in the past, as long as you haven’t owned a home in the past four years. You also need to have a purchase agreement for the home that you want to buy, and you have to be planning to make that home your sole residence.

As long as you meet these rules, you should be able to borrow from your RRSP.